Giving & Receiving Down Payment Gifts for a Millburn-Short Hills Home

It's often said that we have a buyer's market today, but in some ways it may be a lender's market. Banks have been very choosy about who qualifies for a mortgage, and for Millburn-Short Hills homebuyers, coming up with the down payment can pose a challenge.

Giving money to a close family member for the purchase of a home, with no strings attached, may either come naturally or seem counter-intuitive, depending on your views. If you are thinking of granting a monetary gift towards home ownership, here's a few things to consider first:

• Would you offer this same amount of money as a gift, if it were for any other purpose?
• Is your family member ready to take on the full responsibilities of home ownership?
• Will the amount of the gift cause any tax implications?
• Are you providing the gift out in good spirit, or out of a sense of obligation?

Having the means to help your family is a wonderful thing. But if making a cash gift could leave you in a lurch, or you have doubts about this being the appropriate time, then step back and evaluate the situation. Talk it over. There are also other ways to help, such as co-signing, or helping with furnishings, appliances and moving expenses.

If you are on the receiving end of a down payment gift, be sure to know the lender's documentation requirements. A notarized letter may be required, as well as proof of the funds transfer between accounts.

Depending on the type of mortgage loan you are seeking, the amount of gift you can use may vary. For example, if your loan is being structured for the secondary market with Freddie Mac, you may need to come up with at least 5% of the down payment using your own funds. 

If your loan is being backed by Fannie Mae, then all of your down payment can come from a gift. FHA loans also allow the entire down payment to come from a gift.

In all cases, covering the down payment is only one aspect of satisfying the loan criteria. Your credit score and debt to income ratio would still need to pass muster. 

As your Millburn-Short Hills real estate agent, I provide information like this as a part of my service to clients and the community. I can also tell you that there are many good opportunities for home ownership in the Millburn-Short Hills real estate market. Our location and quality of life continue to attract new buyers to our area. 

If you need help with your Millburn-Short Hills home search, or you are thinking of selling your Millburn-Short Hills home, I will be there to help you. I am truly passionate about what I do, and I would enjoy talking to you about your real estate needs. You are always welcome to contact me with your questions.

Wishing you all the best this holiday season,

Elaine Pruzon
Coldwell Banker Residential Brokerage
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